Special rule on notifications for the reduced rate on food and beverages (opting into taxable status / not applying the simplified taxation method)In the year the tax on food goes down, the way to file notices is expected to be special too
An NTA leaflet describes a proposed special rule on the timing of notifications for tax-exempt businesses and simplified-taxation businesses that sell food and beverages. If the notification is filed during the taxable period that includes April 1, 2027 (Reiwa 9), the business can become a taxable business operator, or use the general method, from that taxable period. The leaflet states that this applies only if the bill is enacted.
- January 1, 2027 (Reiwa 9)If the special rule is used, taxable status starts on this date (food and beverages from January to March at 8%)
- April 1, 2027 (Reiwa 9)The consumption tax rate on food and beverages is cut to 1%
- December 31, 2027 (Reiwa 9)File the notification during this taxable period (until year-end for individuals)
Key points
- A tax-exempt business can become a taxable business operator from the taxable period that includes April 1, 2027 (Reiwa 9) by filing the notification of election to be a taxable business operator during that period (until the end of 2027 for sole proprietors).
- Using this special rule, the business becomes taxable from January 1, 2027; sales of food and beverages from January to March are taxed at 8%, and it is a taxable business operator for the two years 2027 and 2028.
- A simplified-taxation business can file the notification of non-application of the simplified taxation method during the taxable period that includes April 1, 2027 (Reiwa 9) and file under the general method from that period.
- The requirement to keep the simplified taxation method for two years (the so-called two-year lock-in) does not apply to the taxable period that includes April 1, 2027 (Reiwa 9).
- There is also a transitional measure that lets a business that registers as a qualified invoice issuer become a taxable business operator partway through a taxable period.
What to do in practice
- Estimate for 2027 whether the tax on purchases is likely to exceed the tax on sales.
- If a notification looks necessary, check the deadline and where to file in the source.
A proposal would add special rules, in the year the consumption tax on food is due to go down, that make it easier to choose your tax calculation method again. In short, the deadline for filing a notice would become easier to use than usual.
- ○Applies: Sells food
- ○Applies: A small shop that does not pay consumption tax right now
- ○Applies: Uses the easy calculation method
- ×Does not apply: Sells no food at all
Points
- A small shop that has not had to pay consumption tax could file a notice within a set period and become a tax-paying shop from that year.
- A shop that chose the easy calculation method could file a notice within a set period and switch to the regular method.
- The easy method normally has to be kept for two years, but this rule would not apply in that year.
What the words mean
- Taxable business operator
- A shop that collects consumption tax from customers and pays it to the government.
- Simplified taxation
- A way to calculate consumption tax easily by using a fixed ratio.
- National Tax Agency (NTA): NTA: Leaflet on the consumption tax rate reduction for food and beverages
- National Tax Agency (NTA): NTA: Special site on the consumption tax rate reduction
This article summarizes and explains materials published by government agencies and is not advice on any individual case. Rules can change, so for actual procedures and decisions always check the latest original materials and consult professionals such as tax accountants or labor and social security attorneys. English, Simplified Chinese and Traditional Chinese versions are translations prepared from the Japanese articles for convenience. If anything differs, the Japanese text and the original source take precedence.